LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client's recommendation includes both a RRIF and a TFSA. For withdrawals, the sequencing advice is usually:
- ADraw only from the RRIF, since it is the plan that must be emptied first under the tax rules
- Take the RRIF minimum, then draw from the source that best manages the tax bracket and benefits
- CDraw from the TFSA first in every case, since tax-free withdrawals are always the cheapest income
- DAlternate between the two plans each year, so that neither plan is depleted before the other
Correct answer: B) Take the RRIF minimum, then draw from the source that best manages the tax bracket and benefits
Withdrawal sequencing manages tax and benefits over the retirement. The TFSA is a flexible tool for income above the bracket threshold.
Why the other options are wrong
- ARRIF-only withdrawals may push the client into higher brackets.
- COver-using the TFSA leaves the RRIF tax liability growing.
- DWithdrawal order should be planned around tax, not alternated.
Exam tip
RRIF minimum, then bracket-managed withdrawals; TFSA for excess.
Common mistake
Ignoring OAS clawback when sequencing withdrawals.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.